Practical Insights (Blog)

Responding to Market Dynamics

These are trying times for the UK’s big four supermarkets, Tesco, Asda, Sainsbury’s and Morrisons. All have struggled with falling sales as shoppers’ habits change. Consumers are ditching the traditional big weekly shop in favour of several visits to smaller local shops and discounters. Additionally, the seemingly unstoppable rise of insurgent German supermarkets, Aldi and LIdl, has cost the established names dearly. An increasingly ferocious price war means that grocery prices have fallen constantly since autumn of 2014, bringing prices down by 1.7% in just 12 months according to retail researchers Kantar Worldpanel.

This seismic shift in consumer shopping habits has driven the supermarkets to rethink their buying strategies, slashing prices, squeezing margins and lengthening payment terms. This is piling on the pressure across the entire supply chain.

The UK’s food and beverage manufacturers have been hard hit, with many experiencing “significant financial stress” according to a study by insolvency specialists Begbies Traynor. The ascent of the discounters has done little to offset the pain, as the majority of canned and packet goods on their shelves are sourced overseas. However, growth opportunities still exist for companies who are able to quickly develop the operational agility to meet the pace of consumer trends.

Achieving Total Value Optimization™, every aspect of the business needs to move beyond simply being efficient and continuously improving to being an integral part of adding business value for the customer.

Customers are forming preferred networks of suppliers so increasingly suppliers will need to collaborate across the network not just directly with their customer.

The speed of innovation required to maintain the supply, quality and availability of food and drink to an increasingly demanding and growing global population is a challenge that governments and the industry as a whole are only just beginning to quantify, so continued, intelligently directed, and growing R&D investment will be vital to future success.

The sector needs to utilize new technologies to transform the way they do business and enhance the quality of their products and services.

Click here to read Maine Pointe’s full report: Opportunities and challenges for the UK drink manufacturing and food processing industry. How Total Value Optimization™ can help your business thrive and respond to customer demand.

As specialists in procurement, logistics and operations, we know that there are cost savings to be found almost everywhere in the key areas of your value chain. Not only that, we have the experience, methodology and capability to deliver significant savings and help clients move up the maturity curve to achieve Total Value Optimization™.

Find out how Maine Pointe can help assess your operations and implement improvement projects that deliver fast and compelling economic returns.